Falling

Despite the recent run-up in natural gas prices, the U.S. Energy Department believes a shift to the downside is likely because of excess storage, more than adequate production capacity and only a moderate increase in demand. The downturn will come “once the summer season starts and the weakness of (storage) injection-related wellhead demand becomes more apparent,” according to the Short-Term Energy Outlook issued last week.

Energy prices may be falling and the “global economy has been in the toilet,” but Raymond James Energy analysts believe energy stocks are at the bottom of a cyclical downturn, and as “strong commodity fundamentals” become visible in the first quarter,” the stocks will begin to rise again. In the Stat of the Week on Jan. 7, the analysts noted that balance sheets are stronger, the industry has consolidated and absolute energy prices are “meaningfully higher today” than they were in the last downturn in 1999.

Energy prices may be falling and the “global economy has been in the toilet,” but Raymond James Energy analysts believe energy stocks are at the bottom of a cyclical downturn, and as “strong commodity fundamentals” become visible in the first quarter,” the stocks will begin to rise again. In the Stat of the Week Monday, the analysts noted that balance sheets are stronger, the industry has consolidated and absolute energy prices are “meaningfully higher today” than they were in the last downturn in 1999.

After free-falling on the heels of another bearish storage report announced last week, natural gas futures rebounded modestly Friday as traders covered shorts ahead of the weekend. The January contract finished at $2.701, up 14 cents for the session, but down a cool 50 cents from its high notched just two days prior. Estimated volume was high as 135,604 contracts changed hands.

With fundamental influences remaining weak and a falling screen to boot, it was hardly surprising Monday when cash prices failed for the most part to rebound from their weekend softness. Movement ranged from essentially flat to down a dime or so at nearly all eastern, California and Permian Basin points. The weakness was more pronounced in the Rockies/Pacific Northwest and San Juan Basin markets, where declines ranged from about a dime to 20 cents.

Despite falling gas prices, declining demand and increasing production, the rush is still on to bring more liquefied natural gas (LNG) to the United States. Two El Paso Corp. subsidiaries are conducting separate open seasons to determine non-binding customer interest in transportation capacity on pipelines that will transport natural gas from El Paso Global LNG’s planned LNG terminal on Grand Bahama Island to Florida.

Taking advantage of falling natural gas prices that have pushed down the worth of energy companies, Dominion announced last week it will acquire Louis Dreyfus Natural Gas Corp.– with 89% of its production in natural gas — for $2.3 billion in cash, stock and assumed debt. The deal will improve the utility giant’s gas reserves by 60% and grow its energy trading business, which in turn could lead to some generation acquisitions down the road, according to Dominion’s CEO.

Taking advantage of falling natural gas prices that have pushed down the worth of energy companies, Dominion announced Monday it will acquire Louis Dreyfus Natural Gas Corp.– with 89% of its production in natural gas — for $2.3 billion in cash, stock and assumed debt. The deal will improve the utility giant’s gas reserves by 60% and grow its energy trading business, which in turn could lead to some generation acquisitions down the road, according to Dominion’s CEO.

The number of rotary rigs drilling for gas in the United States fell by five rigs to 1,030 while total rigs drilling for oil and gas were up by one, Baker Hughes reported on Friday. The number of rotary rigs operating in the Gulf of Mexico rose by six to 140 but are down 15 from last year, the company reported.